CVC Capital Partners has agreed a deal with three sovereign wealth funds in which the European private equity manager has sold a ten per cent stake in itself.
No valuation is known but one investor from the Middle East and two from Asia have taken the interest in the private equity firm, lining it with money for new deals and to broaden its asset range. News of the arrangement first broke on Bloomberg.
The rare deal comes as Europe’s mega funds vie for a limited pool of cash LPs have earmarked for the larger end of the market.
BC Partners hit the fundraising trail early, soaking up commitments for its €6.5bn fund at the end of 2011 and closing earlier this year. Its tactic of aggressive fee discounting was favoured by investors.
CVC, meanwhile, is preparing to enter the fray with its own new flagship buyout fund, and the new deal will boost its coffers, although sovereign funds typically have the clout to access sidecar funds with exclusive terms.
Although ceding control in private equity firms is not yet commonplace, CVC follows in the footsteps of Apax Partners and TPG Capital.
Apax, which is halfway through a mammoth €9bn fundraising, sold a ten per cent stake in itself to China Investment Corp, Australia’s Future Fund and Government of Singapore Investment Corp in 2009.
The Singaporean investor then joined the Kuwait Investment Authority last year in buying up an interest in Texas-based buyout group TPG Capital.
Selling to a cash-rich national investor is just one way private equity bosses have been able to raise money from the firms they helped found.
KKR, Carlyle and Apollo have all opted for partial stock market listings in the past, Blackstone leading the charge in 2007 before the financial crisis struck.